Understanding foreclosure – what to do if you’re behind on mortgage payments

by Susan Paige on January 8, 2020 · 0 comments

When you start making plans to buy your own place, you usually envision the wonderful life you’re going to have for years to come in a safe and cozy house. But as life is full of surprises, and some of them are not the pleasant kind, your dream can fall apart in front of your eyes. Financial issues can arise for a variety of reasons, and one day you might be facing a foreclosure process.

Signing a mortgage to buy a house means that you agree to pay your lender the full amount of the loan, plus interest, over a specific period of time. If you can’t keep up with your mortgage payments, the lender has the right to take possession of your property in order to regain the amount loaned to you, through a foreclosure process. 

If you’ve received a foreclosure notice and you’re worried that you’re going to lose your house because of late payments, then you have to take immediate action:

Be informed

It’s important to know how the foreclosure laws work in your state. In some states the foreclosure process is judicial, meaning that the lender has to file a lawsuit against you and open a process to take your property, while in other states they can sell your house without going to court. If you live in Philadelphia for example and you’re one step away from losing your home, you’ll have to talk to a Philadelphia foreclosure lawyer to help you navigate the process and find the best solution, since Pennsylvania is one of the states where foreclosures are judicial.

Contact your lender

Being honest and willing to communicate can save you a lot of trouble. Foreclosing is a complicated and difficult process and most lenders would be happy to find different ways to fix the problem, such as:

  • Refinancing – taking a new loan to make up for the payments you skipped 
  • Rethinking the payment plan – you can consult with your lender to and devise a plan that will help you start paying again and cover the missed payments
  • Forbearance – you can agree with your lender to put payments on hold for a determined period of time, until you recover financially 
  • Modifying the loan – to make payments easier to handle, your lender can agree to modify the terms of the loan

Talk to a HUD-approved housing counselor

There are federally approved agencies where you can find support when faced with difficulties in managing your mortgage payments. Here you can talk to trained counselors who can analyze your situation, advise you and help you develop a plan to avoid foreclosure. They will assist you every step of the way and you won’t have to pay for their services.

Consider a short sale

If you don’t think that your financial situation will improve, a short sale can be a good option for you. If your lender agrees, you can sell the house for less than it’s worth and pay your lender what you owe or at least you’ll be able to cover a part of your debt. It’s not ideal, but at least your credit score will suffer less. 

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